mental accounting of mutual fund investors and marketing mix

Transcription

Asia Pacific Journal of Marketing & Management Review__________________________________________ ISSN 2319-2836
Vol.2 (2), February (2013)
Online available at indianresearchjournals.com
MENTAL ACCOUNTING OF MUTUAL FUND INVESTORS AND
MARKETING MIX -- A STUDY FROM ‘4C’ MARKETING MIX
PERSPECTIVE
TARAK PAUL
ASSISTANT PROFESSOR,
ROYAL SCHOOL OF BUSINESS, GUWAHATI-35, ASSAM
_____________________________________________________________________________________
ABSTRACT
Successful marketing depends on how a company blends 4P variable of marketing mix. The
marketing program should provide the want satisfying need goods and services for the
company‟s markets. The basic idea is to target the consumers buying decision and increase
market share of the company. This study aims at understanding the state of mental accounting of
mutual fund retail investors‟ from „4C‟ dimension of marketing Mix (i.e. Customer Solution,
Customer cost, Customer convenience and Customer communications). A sample of 260 mutual
fund investors has been taken for this purpose from Guwahati city. Attempt has been made to
understand the state of mental accounting and power of influence of „4C‟ dimension of
Marketing Mix and Mental accounting on each other.
KEYWORDS: Index of Marketing Mix, Mutual fund, Marketing Mix, Perception.
_____________________________________________________________________________________
INTRODUCTION
Understanding human buying behavior has always been area of keen interest of marketing
experts. Human behaviour is a guided by perceptional psychology. Behavioral scientist pointed
out the influence of psychology on decision making (Chandra, 2008). Singh (2012) viewed that
behavioral factors undoubtedly play a role in decision making process. People receive
information from different sources and process these in their mind while making a decision.
Decision making process is greatly influenced by how people perceive a particular situation or
event. Perception is the process by which and individual selects, organizes and stimuli into a
meaningful and coherent picture of the world (Nair, 2011).
A new model of consumer behavior has been developed by Theler (1985) using a hybrid of
cognitive psychology and macroeconomics. The model starts with mental coding of information
using prospect theory value function. Prospect Theory as proposed by Kehneman & Tversky
states that individuals tend to react differently to equivalent situations. This is a psychological
aspect of human being which may vary significantly from person to person. In the perceptual
process of human thinking, mental accounting comes into picture as individual matches the
information received from different sources with the past stored information in his mind and tries
to understand a particular situation from different perspective and categorize different events.
Behavioral scientist termed such categorization of events as mental accounting. Thaler (1999)
termed mental accounting as a set of cognitive operations used by individuals and households to
12
organize evaluate and keep track of financial activities. Henderson and Peterson (1992) stated
that mental accounting refers to how people categorize and evaluate financial outcomes. In this
paper the concept of mental accounting has been used from marketing mix perspective. The
paper examines the power of influence of each of the variable of 4C (i.e. Customer solution,
Customer Cost, Customer Convenience and Customer cost) on overall satisfaction overall
satisfaction from investment in mutual fund and vice versa.
Mutual fund, in simple words, is a trust that pools the savings of a number of investors who share
a common financial goal. Siddaiah (2011) defined mutual fund as an entity that pools money
from several investors and invest the pooled money in different kinds of securities or assets. This
pool of money is invested in accordance with the stated objectives. Mutual fund has gain
popularity in the recent past. This is evident from the fact that asset under management has gone
up from Rs 25 crores as on 31st March, 1965 to Rs. 592250 crores as on 31st March, 2012. The
industry has grown significantly in last three decades. Sadhak (2003) reported that in India, MF
Industry was slow till the end of 1980 due to government control. The reasons for such
popularity of Mutual fund is that it provides investors a well-managed diversified portfolio
according to need of the investors as well as overregulation of financial services industry. Mutual
funds have been able to attract the retail investors with their innovative products.
REVIEW OF MARKETING MIX
Kotler and Armstrong (2008) stated that marketing mix is a set of controllable, tactical marketing
tool that firms blend to produce the response that it wants in the target market. Any successful
marketing depends on number of issues like what the company is going to produce, how much it
is going to charge, how it is going to deliver the products or services to the customers and how it
is going to tell its customers about the product. Traditionally these considerations were known as
4Ps of marketing mix i.e. Product, Price, Place and Promotion. Kotler and Armstrong (2008)
stated 4Ps concept takes the sellers view of the market, not the buyers view. Lauterborn, et al.
(1993) stated that marketers must think in terms of 4Cs (Customer Solution, Customer Cost,
Customer Convenience and Customer Communication) instead of 4 Ps. In this age of customers‟
relationships 4Ps concept better described by 4Cs from the buyers view point which was ignored
by 4P marketing mix. Marketers sees themselves as selling products and customers see
themselves as buying value or solution to their problems (Customers‟ Solution). Customers are
interested in total cost (Customers‟ Cost) rather than price of obtaining, using and disposing the
products. Customers want the products and services as conveniently as possible (Customers‟
Convenience). Finally they want two way communications (Customers‟ Communication). These
has resulted a shift of 4P model of marketing mix to 4C model. Bhasin (2011) viewed that the
principle of four C‟s of marketing states that your customer should be your prime focus. Unlike
the traditional marketing mix where primary focus is on products, in the 4C model the primary
focus is the customer. Gardvdc (2011) stated that 4C is a better approach is batter approach
when compared with 4P approach. He stated 4C‟s as Consumer value, Cost to satisfy,
Convenience to buy, and Communication. According to him firms sell solution that fulfills
customers‟ needs. Price is only one aspect of cost to satisfy. There are other costs like cost to go
to stores or possibly a cost of conscience. Customers take all the factors into consideration. So
cost is the appropriate term. Regarding convenience, he stated instead of thinking in terms of
location or place, think how your customers want to buy. There could be a store but they may
13
prefer a web shop and catalogue for type of products. Customers might expect. Nezakati, Abu &
Toh (2011) mentioned that 4C‟s imply more emphasis on customers want and concern than 4P.
Consumer value as a complexity approach allows the product to develop as the customer uses it
with the perfect product emerging from the inter-relationship between product and customer use.
Price may be somewhat companies decided to charge for their product, customer cost represent
the real cost that customers will to pay. Implying management‟s method of placing product
where they want to be as customer convenience recognizing consumers‟ choice for buying in
ways convenient to them. Promotion suggest the ways in which companies persuade people to
buy , consumers communication is a two a process involving feedback from customers to
suppliers. Bose (2010) stated modern business managers consider marketing as customer
oriented. Thus the main role of marketing is the satisfaction of customers‟ needs and desires.
Kumar and Apsal (2011) viewed firms cannot develop product and try to sell them to mass
market. Firms require to study customers‟ needs and wants and then attract customers. Hence,
firms should customize the products according to their needs and wants.
Thus, the 4C approach is a better approach as compared to 4P approach of marketing mix as it
follows the “you” marketing philosophy of putting customers first. The 4C‟s marketing mix
dimension changes product, price, place and promotion (the 4Ps) to Customer solution, Cost,
Communication and Convenience (the 4Cs).
STATEMENT OF THE PROBLEM:
The study is conducted by using the 4C concept of marketing mix to understand the power of
influence of each of these C‟s on state of mental accounting with respect to overall satisfaction of
mutual fund investors. This study is unique in the sense that it has incorporated the concept 4C
marketing mix in it and attemped to understand the state of mental accounting of the mutual fund
investors and power of influence of each of these on overall satisfaction.
OBJECTIVES
In the light of the above discussion, the objective considered for the study is to assess the state of
mental accounting and power of influence of „4C‟ dimension of Marketing Mix and Mental
accounting on each other.
For this purpose, all the items have been categorized into four groups i.e. Customer Solution,
Customer Cost, Customer Convenience and Customer Communication and then analyzed by
using Somer‟ D Test to test the power of influence of each of these on overall experience from
investment in mutual fund investment and vice versa.
METHODOLOGY
As regards primary data, a structured questionnaire (Annexure) was prepared targeting the retail
mutual fund investors. Items were selected on the basis literature survey to elicit their views
about each of „C‟s of 4C concept of marketing mix. Respondents were asked to give their
opinion on the items selected on a 5 point scale. Items were selected on basis of literature survey
and pilot study. The questionnaires were served to 260 respondents (mutual fund investors) of
Guwahati city selected through snowball sampling. Secondary data has been collected from
books, journals, and internet. Data has been analyzed using SPSS. Descriptive statistical analysis
14
of data has been done to understand the state of perception and for assessing the influence of 4C
on mutual fund investors‟ state of mental accounting, Somer‟s D‟ Test has been done which
measure asymmetric association between the variables as the variables are measured in ordinal
scale.
ANALYSIS & INTERPRETATION
The collected data was analysed with the help of SPSS and the results are followed-
Investment in
mutual fund
products are easy
I am aware of rules
and regulation of
mutual fund.
There is no
guarantee of income
from mutual fund
investments.
There is no steady
income from mutual
fund investment.
I feel safe and
secure as when I
invest in mutual
fund products
I have very little
idea about mutual
fund products
TABLE 1: DESCRIPTIVE STATISTICS OF ITEM 1-6
N
Mean
260
2.96153846
260
3.461538
260
3.423077
260
3.230769
260
3.5
260
3.038462
Std. Dev
Sum
c.v.
1.21592004
770
41.0570402
0.904689
900
26.13545
0.945434
890
27.61943
1.069867
840
33.11493
0.812404
910
23.21154
1.112862
790
36.62583
Source: Compiled from primary data.
I examine the print media
before decision making
260
4.115385
260
3.615385
260
3.923077
260
3.307692
260
3.576923
SD
Sum
c.v.
1.2
780
40
0.485165
1130
11.16308
0.711445
1070
17.28745
1.134087
940
31.36837
0.796145
1020
20.29388
1.289007
860
38.96997
0.986836
930
27.58898
Regular monitoring is
important for making
mutual fund investment
decision
260
4.346154
Regular investment in
mutual fund can produce
better return at lesser risk
260
3
Investment for long term
in mutual products
produced good results
N
Mean
Constant monitoring of
funds is important for
decision making
It is difficult to select a
product for investment
I often become the victim
of others decisions
15
I am overall happy with my
mutual fund investment
I doubt the integrity of the
services of local agents
There am not sure about the
performance of the funds in
which I have invested
Frequent change in NAV
discourages me to invest in
mutual funds
I feel less confident regarding
time and price at which
mutual fund products are to
be bought and sold
AMFI, investor‟s Guide
should be provide by the
companies for the investors
There is no sufficient
published information for
investment making
N
Mean
260
3.846154
260
4.076923
260
3.653846
260
3.153846
260
2.923077
260
260
3.230769 3.923077
SD
Sum
c.v.
6.004614
1000
156.12
1.412036
1060
34.63485
0.891843
950
24.40835
1.084152
820
34.37554
1.016782
760
34.78466
0.951113 0.627572
840
1020
29.4392 15.99692
FIGURE 1: DIAGRAM SHOWING MEAN OF THE SCORES OF THE ITEMS
For purpose of analysis, the scale value considered were: 1 - 2.5 = low level of agreement, 2.5 3.5 = moderate level of agreement and 3.5 - 5 = high level of agreement. Figure-1 shows that the
mean score of most i.e.50% (10 items) of the items ranges between 2.5 - 3.5 (items - 2,
3,4,5,6,7,8,12,17 & 19) and that of score of 45% of the item (9 items) ranges between 3.5- 5 (
items - 8,9,10,11,13,14,15,16,20) and only score of one item ranges between 1-2.5. Therefore, it
can be said in respect of 50% items there is moderate level of agreement and in respect of 45%
of items high level of agreement and only in respect of one item there is lower level of
agreement.
16
FIGURE 2: DIAGRAM SHOWING CO-EFFICIENT OF VARIATION OF THE SCORES
Figure 2 shows the co-efficient of variation of scores of all twenty items which ranges between
11.16-41.05 (%) except item no 14 [since c.v. is maximum], other items have reasonable
consistency [i.e. within 41.05 % of C.V.]. For the purpose of understanding the influence 4C
dimension of Marketing Mix on mental accounting (IMA), Somers‟ D Test has been applied and
the summary of test is shown in table 4-table-7. Items have classified on the basis Customer
Cost, Customer Cost, Customer Convenience and Customer Communication. Two models have
been used- Model1-: IMA (Index of Mental Accounting = f (Itemn) and Model-2: Itemn= f
(IMA). Item no. 20 has been considered as index of Mental Accounting (IMA). The summary of
outcome of the test are as followsTABLE 4: CUSTOMER SOLUTION ITEMS OF MARKETING MIX:
Item
No
Customer solution items
1
Idea about mutual fund
products
Safety and Security of
investment
2
Association with
Validity in
the index of
population
mental
accounting (IMA)
-ve association
VALID
Which one is powerful
model:1 ima = f(itemn)
alternative model 2:
itemn =f(IMA)
Explanatory Power of
Model 2 > Model 1
Model 2 > Model 1
+ve association
VALID
Awareness of Rules and
Regulation
Ease of Investment
+ve association
VALID
+ve association
VALID
8
Constant monitoring of
funds
+ve association
VALID
Model 2 > Model 1
11
Regular monitoring of
Industry
+ve association
VALID
Model 2 > Model 1
12
Difficulty in selection of a
product
-ve association
NOT
VALID
Model 2 > Model 1
5
6
Model 2 > Model 1
Model 2 > Model 1
17
In respect of the items considered (Table-4), degree of power of influence of each of customer
solution variables on IMA (Index of Mental Accounting i.e. item 20) is lower than the degree of
power of influence of IMA on these items. The direction of relationships between IMA with
respect to the items is positive except items 1&12 which are negative. Except items 12 the
relationship that exists in the sample between IMA with respect to rest of the items are likely to
be discernible in the population at 5% level of significance.
TABLE 5: CUSTOMER COST ITEMS OF MARKETING MIX
Model:1 IMA = f(itemn)
alternative Model 2: itemn
=f(IMA)
Model 2 > Model 1
Item
No
Customer cost items
Association with
the index of
mental accounting
Validity in
population
3
No steady income
-ve association
VALID
4
No guarantee of
income
Investment for long
term
Regular investment for
better return at lesser
risk
Confidence regarding
time and price to be
bought and sold
Discouragement from
frequent change in
NAV
No surety about the
performance of the
funds
+ve association
+ve association
NOT
VALID
VALID
+ve association
VALID
-ve association
VALID
Model 2 > Model 1
-ve association
VALID
Model 2 > Model 1
-ve association
NOT
VALID
Model 2 > Model 1
9
10
16
17
18
Model 2 > Model 1
Model 2 > Model 1
Model 2 > Model 1
In respect of the items considered above (Table-5), degree of power of influence of each of
customers cost variables on IMA are lower than the degree of power of influence of IMA on
these items. The direction of relationships between IMA with respect to items are positive except
with respect to items 3,16,17,& 18 are negative and except the items 4&18, the relationship that
exists in the sample between IMA with respect to rest of the items are likely to be discernible in
the population at 5% level of significance.
18
TABLE 6: CUSTOMER COMMUNICATION ITEMS OF MARKETING MIX:
Sl no
Customer
communication
items
7
Victim of others’
decisions
Examine the print
media before
decision making
No sufficient
published
information
AMFI investor’s
Guide by the
companies to the
investors
13
14
15
Association with
the index of
mental
accounting
(IMA)
+ve association
Validity in
population
+ve association
VALID
-ve association
VALID
Model 2 > Model 1
+ve association
VALID
Model 2 > Model 1
VALID
Which one is
powerful Model:1
IMA = f(itemn)
alternative Model 2:
itemn =f(IMA)
Model 2 > Model 1
Model 2 > Model 1
In respect of the items considered (Table-6), degree of power of influence of each of variables
IMA is lower than the degree of power of influence of IMA on items. The direction of
relationships between IMA with respect to above items are positive except with respect to item
14 which is negative. The relationship that exists in the sample between IMA with respect to rest
of the items is likely to be discernible in the population at 5% level of significance.
TABLE 7: CUSTOMER CONVENIENCE ITEMS OF MARKETING MIX:
Sl no
Customer
convenience items
Association with
Validity in
the index of
population
mental
accounting (IMA)
19
Doubtfulness about the -ve association
integrity of the
services of local
agents
VALID
Model:1 IMA = f(itemn)
alternative Model 2: itemn
=f(IMA)
Explanatory Power of Model
2 > Model 1
In respect of the items considered (Table-7), degree of power of influence of the variables on
IMA is lower than the degree of power of influence of IMA on the item. The direction of
relationship between IMA with respect to item is negative. The relationship that exists in the
sample between IMA with respect to the item is likely to be discernible in the population at 5%
level of significance.
19
TABLE 8: OVERALL INDEX OF MENTAL ACCOUNTING (IMA)
Item
No. 20
Overall happiness with my mutual fund
investment experience.
MENTAL ACCOUNTING
INDEX
CONCLUSION
From the study, it is evident that investors have moderate and high level of agreement in respect
of mutual fund products as a solution of their investment needs; cost associated with investment
in mutual fund, their convenience to buy and sell of the mutual fund investment and finally the
communication involved in mutual fund investment. The study showed that overall investment
experience (Index of mental Accounting) of Retail Investors of Mutual fund has more impact on
the 4 C‟s (Indices of Marketing Mix) and the power of influence of all the items grouped
according to 4C‟s of marketing mix has lesser influence as compared to power of influence of
index of mental accounting. The study leaves scope for further research in the area of mental
accounting relating to cognitive operation used by individual to keep track of its financial
activities as propped by Thaler.
References:
1. Chandra, P., 2008. Investment Analysis and Portfolio Management. New Delhi: Tata
McGraw-Hill Publishing Company Limited.
2. Bose, D. C., 2010. Modern Marketing: Principal and Practice. New Delhi PHI Learning
Private Limited.
3. Gerdvdc., 2011.How the Marketing Mix Changed from 4P‟s to 4C‟s. [Online] Available at:
http://www.olivedia.com/2011/07/how-the-marketing-mix-changed-from-4-ps-to-4-cs/
[Accessed 12th May 2011].
4. Bhasin, H., 2011.An alternative to marketing mix- 4C‟s of marketing. [Online] Available at:
http://www.marketing91.com/alternate-marketing-mix-marketing/ [Accessed
12th June
2012].
5. Henderson, P. and Peterson,.1992. Mental Accounting and Categorization. Organisation
Behaviour and Human Decision Making Process, 51(1), pp.92-117
6. Joshi, V., 2009. Organisational Behaviour, Pune:Symbiosis Centre for Distance
7. Nair, S. R., 2011. Consumer Behaviour in Indian Perspective. Mumbai: Himalaya Publishing
House.
8. Kumar, P. and Apsal, P., 2011. Breakdown of Marketing P‟s: A New Evolution. VSRD
International Journal Business and Management Research, 1(1), pp.59-63
9. Kotler, P. and Armstrong, G. 2008. Principles of Marketing, 13th Ed. New Delhi: Dorling
Kinderley India (Pvt) Ltd.
10. Lauterborn, R. F., Schullz, D. E. & Tannenbaum, S. I., 1993. Integrated Marketing
Communications. 1st ed. U.S.: NTC Business Books, a division of NTC Publishing Group
11. Thaler, R H.,1999. Mental Accounting Matters. Journal of Behavioral Decision Making,
12(3), pp.183-206.
20
12. Sadhak, S., 2003. Mutual Funds in India- marketing and Investment Practices. 2nd ed. New
Delhi: Response Books
13. Singh, S., 2012. Investors Irrational Behaviour and Self – Defeating Behaviour- Insights
from Behavioural Finance. Journal of Global Business Management, 8(1), pp. 116-122
14. Thaler, R. H., 1985. Mental Accounting & Consumer Choice. Marketing Science ,4(3),
pp.199-214.
15. Siddaiah, T., 2011. Financial Services, Delhi: Dorling Kinderley India (Pvt) Ltd.
16. Paul, T., 2012. A Study on level of Expectation of Mutual Fund Investors and the Impact of
Demographic profile on Period of Investment. International Journal of research in Commerce
and Management, 3(7), pp. 136-139.
ANNEXURE
QUESTIONNAIRE
Part-I
Name(Optional):
In respect of the following statements relating to mutual fund investment, please tick the
appropriate alternatives:
1. I have very little idea about mutual fund products
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
2. I feel safe and secure as when I invest in mutual fund products
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
3. There is no steady income
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
4. There is no guarantee of income
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
5. I am aware of rules and regulation of mutual fund industry
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
6. Investment in mutual fund products are easy
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
7. I often become the victim of others decisions
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
8. Constant monitoring of funds is important for decision making
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
9. Investment for long term in mutual products produced good results
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
10. Regular investment in mutual fund can produce better return at lesser risk
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
11. Regular monitoring is important for making mutual fund investment decision
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
12. It is difficult to select a product for investment
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
13. I examine the print media before decision making
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
14. There is no sufficient published information for investment making
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
15. AMFI, investor‟s Guide should be provide by the companies for the investors
21
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
16. I feel less confident regarding time and price at which mutual funds are to be bought and
sold
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
17. Frequent change in NAV discourages me to invest in mutual funds
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
18. There am not sure about the performance of the funds in which I have invested
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
19. I doubt the integrity of the services of local agents
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
20. I am overall happy with my mutual fund investment
Strongly Agree
Agree
Undecided
Disagree
Strongly Disagree
Part-II
1.
Age(Please tick):
Below 30 years
above 60 years
2. Gender:
Male
Female
3. Educational qualification: up to 10th
4. Annual Income:
Below 1lakh
30-40 years
up to 12th
1-2 lakh
40-50 years
up to Degree
2-3 lakh
50-60 years
Beyond Degree
above 3lakh
Any other comments:
………………………………………………………………………………………………………
……………………………………………………………………………………….
Date………..
Place………….
Signature
22

mental accounting of mutual fund investors and marketing mix

Transcription

Documents pareils

Person with Dementia - Alzheimer Society of Toronto

1 2008 Religion Questionnaire – Final June, 2007 1. If you

ITC Market Analysis Tools (MAT) 2014 survey results

full report - DME for Peace

Robert Pouliot

Industry Overview - July 2015

Investors` Day Development of Retail Banking

Industry Overview - May 2015

Telecoms framework

MUTUAL HEALTH ORGANIZATIONS AND MICRO